Our View: Jobs, not minimum wage hike, should be top American focus

Just about everyone would like a pay raise this Labor Day, from middle class to minimum wage earners. Anyone against raising the minimum wage probably risks comparisons with Ebeneezer Scrooge.

New state and federal bills would in fact require government to impose more minimum wage increases, up to $10 per hour. Doing so, though, would risk further job losses and could hurt other workers whose pay has gone down in actual dollars, not just compared to inflation.

To recap, in May 2007 when U.S. unemployment was 4.5 percent, Congress passed minimum wage increases that eventually reached the current $7.25 minimum. Since that 2007 act in Congress, the jobless rate has jumped to as much as 10 percent.

Studies disagree with each other over how much proven effect a wage hike has on unemployment. Obviously, the housing bubble, Wall Street greed and automaker bankruptcies were large factors in the layoffs. Supporters even point to Massachusetts, which enacted a higher state minimum wage and now has a better jobless rate than Rhode Island, which did not.

Yet some studies do link the 2007 wage hike as a contributing factor to layoffs. Given international trends toward globalization and automation, we believe raising the rate yet again would create one more incentive for eliminating or off-shoring lower-skill jobs.

Supporters of raising minimum wage, including columnist Jim Hightower today, often note that the amount hasn't kept pace with inflation. That's true. Inflation has grown, and costs for food, college tuition, gasoline and health costs have increased by even more since June of 2009, the so-called end of the recession.

Overlooked, though, is a new report showing worse erosion for other workers' wages. While minimum wage has at least stayed constant since 2007, overall worker incomes are down 7.2 percent since that time. The average worker's income, in fact, has been cut 4.8 percent since June 2009 — the start of the so-called recovery.

Inflation hits all workers, not just the 5 percent earning minimum wage. It makes little sense to again raise that wage if other workers are the ones taking real cuts.

America's bigger problem — perhaps biggest of all — is people with no job whatsoever. A natural effect of artificially raising wages is for some companies to cut jobs. That especially hurts the young and low-skilled who also have been hurt worst in this recession. This Labor Day, we need to find ways to help such entry-level laborers stay employed.

Americans long ago found a better solution to low pay is to learn new skills so they could move up the pay ladder and better support families. Even in the best of times, minimum wage has never provided more than a poverty-line income.

Such jobs should be viewed as stepping stones rather than as careers. Workers need to grow into more advanced duties, and not only to help replace retiring baby boomers. Their development also is needed in a global economy. It continues each worker's own life-long productivity. Most people physically can't keep doing the same work at 63 that they did at 23; trying to make a beginner's job pay like a life-long position hampers what should be a natural progression.

The jobs crisis has shown that it's far better to have more people employed at current wages, not idled on unemployment, than to demand another pay raise and risk seeing even fewer people working. With GDP growing at just 1.7 percent — about half of the predicted rate — another wage hike for employers would be bad for them, bad for those who would be laid off, bad for the already unemployed and, ultimately, bad for Michigan and America.